The second-ever service Producer Price Indices (PPIs) released on Monday showed that air travel costs surged in the April-June quarter, reflecting the impact of the flight disruptions and surge in energy prices on the back of the war in West Asia.
Air (Passenger) Service Price Index inflation was 31.94% in April-June, the highest among the seven service sectors for which data was released by the Department for Promotion of Industry and Internal Trade (DPIIT).
Inflation data for air travel is only available for April-June quarter. Inflation for prior quarters could not be computed as the index is compiled with 2025-26 as price reference period, the DPIIT said.
Sequentially, air travel costs surged 18.2% from the January-March quarter, also the sharpest quarter-on-quarter rise among the seven sectors.
Financial services also saw a rise in price pressures in the first quarter of FY27. Banking service contribution inflation rose to a six-quarter high of 6.90% in April-June from 3.30% in the previous quarter and 3.02% in the same quarter a year ago. Banking service prices fell 3.35% year-on-year in the June quarter, staying in deflation for the sixth consecutive quarter.
“The banking service price index, which covers fees and commissions, remains in deflation. It is the contribution index which has risen sharply. The contribution index reflects price changes or activity in intermediation services for loans and deposits and the increase in the Q1 index maybe influenced by the rise in loan and deposit growth in Q1,” said Sakshi Gupta, principal economist at HDFC Bank.
Management of pension funds service inflation rose to 5.20% in the June quarter from -0.76% in January-March and 3.36% a year ago.
Insurance service prices rose 0.98% on year in the June quarter, while securities transaction service prices fell 1.32% on year in April-June.
“Securities transactions services are captured as securities and pension and insurance. The securities services’ inflation has been rising since Q4FY26 but remains in negative zone,” economists at State Bank of India said in a note.
The railway passenger services saw a 3.5% rise in prices, while freight services price inflation remained muted at 0.10% in April-June. The overall railway service price inflation rose to 1.27% in the June quarter from 1.18% a quarter ago.
Telecom service prices rose 0.72% on year in the first quarter of FY27, slower than 0.99% in January-March. This reflected the “higher base effect after rationalization of prices by telecom operators”, SBI said.